All Forum Posts by: Michael Plaks

@Allison Bagay

The answer depends on your future plans. If you're planning to become an employee in some studio - this training cost will not create any tax benefit for you. @Ashish Acharya provided a long explanation why it is so, but the bottom line is: zero tax benefit.

If, on the other hand, you're planning to be a self-employed producer or director - i.e. work for yourself - then yes, this training could be written off once you actually start this new business.

PS. Generally: never take tax advice from people who are selling you something.

@Matthew Shay

A little more complicated than you probably want.

1. For tax purposes, an S-corp is a poor fit for a business which is 100% based on the owner's compensation for his personal services. The S-corp tax game is to set yourself a salary below your earnings - i.e. split your earnings into "compensation for work" and "extra profit." It's really a stretch when applied to a Realtor situation. Would work well for a broker, not that much for an agent.

2. An LLC cannot be licensed as an agent, only a person can be. Accordingly, your commissions will always be reported under your personal SSN, and moving it into an S-corp will create some complications, aka red flags.

3. If you do decide to take the risk and play the S-corp game - do not mix it with the investing LLC. Three reasons: cross-exposure to liability, difficulty in obtaining E&O and general liability insurance for the combo operation, and plus your state Realtor regulators will probably frown upon it, as they fear being drawn into a liability fight.

Want to keep your life simple? Just report your Realtor income and expenses on your personal tax return. If your attorney recommends an extra liability shield, besides E&O, then form a 1-person LLC but treat it as disregarded for the IRS purposes. Meaning still report it directly on your personal tax return. No special tax savings, but no headaches either.

For marketing, you have 3 options:

• just use your name, which is probably the best if you want to build name recognition
• create a DBA which is basically an alias for marketing purposes, if you plan to build name recognition under this trade name rather than your own name
• use an LLC name if you're building a company that will grow to include other agents

@Steven Byers

There is a 2 year waiting period between no-tax sales, not 5 years. So you're good.

It is only working when one spouse has a full-time W2 job, and the other is working in real estate, either exclusively or at least primarily in real estate. Known as the "Real estate professional" status.

This must be your situation, but it is not the situation of Stephen.

@Susan O.

You would have to justify that your physical presence is beneficial for your business. In other words, if you're spending $2,000 for the 3 trips, it should make financial sense. How much your income would have been affected if you did not fly there, as opposed to flying?

So, as long as the trips are economically sensible, and your primary purpose is business - then you can deduct 100% of the tickets and the business portion of all other costs. 

PS. Taking a broker or contractor to a baseball game is no longer deductible.

@Richard V.

Here is one of the old BP posts about rental deductions.

Interest deduction is not limited for rentals. It is only limited for the house you live in.

On your IRA thing - missing the point, I think. If you invest money outside the IRA, then every year taxes eat into your money, undermining the incredible power of compounding. If you do the same investments inside an IRA, the growth is unimpeded by taxes and is therefore much greater. Like 10 times greater over a long term, not 10% greater.

Secondly, if you go the Roth route - you escape taxes on the growth permanently, which is <insert Trump voice> yuuuuge.

On RE Pro hours - yes, it is possible, but remember that you will have to prove your hours with a detailed log, and it have to be hours of actual work. Hours browsing BP posts or attending REI mixers do not count.

 Too late for me :)

Not for tax purposes though - read the thread for an explanation 

Just a quick shout out to @Brandon Hall and @Lance Lvovsky

I pulled out of my mailbox a copy of CPA Practice Advisor - and I see two familiar faces on the cover. Brandon and Lance made the national list of "Top 40 under 40"! 

Way to go, pals!